27th Sep 2021 17:58
(Alliance News) - Moody's Investors Service on Monday assigned a (P)Baa1 rating to the subordinated rating class under Investec PLC's existing GBP2 billion euro medium term note programme.
The credit ratings agency noted the notes in the programme will rank junior to Investec's senior unsecured debt, which is rated at Baa1.
"The (P)Baa1 rating assigned to the subordinated debt class under the EMTN programme reflects the adjusted baseline credit assessment of baa1 of Investec's subsidiary Investec Bank," Moody's said.
Moody's also pointed to its advanced loss given failure analysis for the rating, which shows "moderate loss severity" for the instruments and Moody's assumption of a "low probability of government support for this new instrument, resulting in no uplift."
The Anglo-South African lender and wealth manager is subject to the EU's Bank Recovery & Resolution Directive, which Moody's classes as an operational resolution regime.
"Therefore, Moody's applied its advanced LGF analysis to determine the loss-given-failure of the subordinated instruments. Moody's assumes residual tangible common equity of 3% and losses post-failure of 8% of tangible banking assets, in keeping with the agency's standard assumptions," it added.
Shares in Investec PLC closed 3.7% higher in London on Monday at 310.80 pence each, while Investec Ltd advanced 6.5% in Johannesburg to ZAR64.45.
By Paul McGowan; [email protected]
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